A new Location-Inventory model for multi-period pharmaceutical supply chain distribution network design

A significant area of healthcare costs is the pharmaceutical area. Developing efficient network designs for storage and distribution of perishable pharmaceutical items plays a prominent role in the cost and quality of these products. This study involves a novel joint three-echelon location inventory model for pharmaceutical supply chain in which manufacturers, Distribution Centers and hospitals exist. We consider some particular traits of pharmaceutical items like perishability. In our model, for the first time, remaining lifetime is considered for each received order and also each shipped product. Expired products will be discarded. Multiple periods, multiple pharmaceutical items and single sourcing strategy is assumed. According to inventory level and comparing it with reorder point, the orders will be placed. The proposed model determines the number of manufacturers and DCs, their locations, assignments of hospitals to those DCs and DCs to manufacturers, parameters of inventory policy, positive and negative levels of inventory and expired products so that the total costs are minimized. Finally, numerical illustration and sensitivity analysis are provided to show the applicability and efficiency of the proposed methodology.

A new Location-Inventory model for multi-period pharmaceutical supply chain distribution network design Keywords:

Pharmaceutical supply chain , location inventory model , perishability